Big films cost NZ millions

Attempts to woo Hollywood film-makers have lost New Zealand tens of millions of dollars, confidential ministerial briefings say.

Now, critics are accusing Government ministers of having stars in their eyes.

A Cabinet paper prepared by Treasury in February and released to the Herald on Sunday under the Official Information Act, said subsidies for films such as Avatar and King Kong could not be economically justified.

They had likely caused a net economic loss of $36 million.

The disclosure comes as Variety magazine reports a high-tech Wind in the Willows is to be filmed at Sir Peter Jackson's Weta Workshops in Wellington.

The $30m production could receive up to $4.5m in Film Commission grants.

The Treasury says its findings "raise sufficient concern about the scheme's value for ministers to approach any extension or reconfirmation of the grants with caution".

But Economic Development Minister Gerry Brownlee, who oversees the subsidies, attacked the report as uncreative and said he would ignore the advice.

"No surprises there. Treasury has a generally bad attitude towards economic development of any type, particularly economic assistance," he said.

Brownlee said the scheme was working well, and it was necessary to compete with other countries that offered financial assistance to film-makers.

"There's a pipeline of production coming into this country that would easily go to Queensland, Victoria, New South Wales or other countries that offer bigger incentives."

Act finance spokesman Sir Roger Douglas was scathing of the subsidies.

"It's a transfer of wealth from the average New Zealander to the rich beggars of Hollywood," he said.

And at the other end of the political spectrum, Green Party co-leader Russel Norman agreed.

"Given that the National Party rages against excessive taxpayer spending, you'd think they'd argue for a cap at the very least," he said. "But politicians love being associated with films and famous people."

Auckland University economics professor Tim Hazledine echoed that view.

"It's stars in their eyes and they love it."

Movie producers can get a 15 per cent rebate on any money spent here. Since 2003 nearly $200m has been paid out.

The Labour Government increased the subsidy from 12.5 per cent in 2007, against Treasury advice. Trevor Mallard, the minister at the time, said his government sometimes disregarded Treasury advice because of "ideological differences".

The makers of the world's highest-grossing film, Avatar, received nearly $45m in subsidies. And producers of King Kong pocketed nearly $49m.

The report notes that the beneficiaries of the scheme are mostly United States conglomerates. "The recipients of funds to date have been large international media companies," it says.